What is a Mortgage Broker?

A Quick Overview

So, what is a mortgage broker and why should I use one? Perhaps you are already familiar with obtaining broker loans. If not, this page may be a big help to you.

If you aren't, I'd like to enlighten you. My wife and I first started using a this service years ago and have never looked back since.

When we lived in Dartmouth, Nova Scotia, we used Rod MacInnis from The Mortgage Centre.

When we moved to Lethbridge, Alberta, we used Sue Maier from The Mortgage Centre. (Hey if you get great service, why change.)

A good broker will save you time, money, and frustration.

For the most part except for some special circumstances, they are free of charge and work on your behalf, not the bank. We personally never paid a cent for the service.

A mortgage broker works for you, not the bank or other lender.

Their job is to find you the best interest rate and terms for you.

They "shops" many lenders and finds the best fit for you.

A good mortgage broker, will find you a lower interest rate on your home loan than what you will probably ever find on your own.

The reason for this is, they shop your contract to many lending institutions. It creates almost a bidding war to obtain that loan.

If you go trotting off to your own bank, it is just you and the banker. Many of us feel small and powerless as the banker sits behind their desk and tells you their 3 or 5 year term rate.

They may or may not discuss options we may consider to save us more money.

They just assume and many of us do, that we have to accept that interest rate.

The mortgage we personally have now is locked in for a 5 year term at 3.79%. Neither of our 2 personal banks could even come close to that rate, at that time. Cha-ching! Mama can afford a new pair of shoes! :-)

Our mortgage broker(s), also took the time to explain several different options available to us and what we could realize in savings. Just going to bi-weekly payments as an example made a big difference.

• A Loans Officer at a Bank.
• A Car Salesperson at a Car Lot.
• A Mortgage Broker.

The Car Salesperson works for the Dealership.

The Mortgage Broker works for You.

The Banker's main job is to make the maximum income for the bank.

The Car Salesperson's job, is to make the maximum income for the dealership and him or herself.

The Mortgage Broker's job, is to look after their client (which is you), to save YOU money.

Does that help see the big picture? Do you see the difference? Great!

Lets face it, most of us are busy. Another big plus when you use a mortgage broker is saving you time. Why?

• You arrange a time at your convenience, to sit down with him or her, with no distractions and no feelings of being rushed. You discuss your situation and they go to work.
• They then shops the market. This would take you a huge amount of time.
• The broker arranges everything for you, including all the necessary documents. There is no 2nd, 3rd or 4th visits to the bank.

Remember, they are shopping the best rates and terms for you. Imagine trying to do that on your own!

• Whenever everything is ready, you again arrange a time of your convenience and sit down with your broker. They go over all the details with you and if everything is OK, you sign some papers, and you are on your way.
• That's it. The next step is when you make your first payment.

Lets be real here. As much as I'm a big fan of mortgage brokers, they aren't doing this for free. Right?

Of course not. They are paid by the banks and other lenders that your contract is placed with.

The lenders pay this fee because they now have a loan in place, plus perhaps a repeat or lifetime customer.

Don't fret now, the lenders will still turn a profit on your business. This makes using a mortgage broker a win, win, win situation.

You win with better rates and terms.

The Mortgage Broker wins by being paid by the lender.

The Lender wins by making a profit from your loan.

The one that may concern you, might be if you just can't qualify at a regular lending institution, like a bank or a credit union.

If the mortgage broker has to go looking for say private funding because your credit has been bad in the past, you may have to pay a fee for their service. This will be disclosed to you before they proceed.

Probably yes. They are almost everywhere.

At the time this page was written, in countries such as Canada, United States of America, Australia, New Zealand and Spain, the majority of house loan transactions are handled by a mortgage broker.

I hope for those that aren't all that familiar with their role, that this page on "what is a mortgage broker" has been helpful to you.

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